How to save for a house

How to actually save for a house in a year

Information verified correct on October 27th, 2016

Saving enough money for a home in a year may sound ambitious, but with the right approach you could save the deposit you need in less than 12 months.

For many people, saving the deposit for a property takes years. However, with some financial discipline, you can work towards building up for a deposit for your home loan in just one year.

Here’s what you need to do to save the funds for a deposit as quickly as possible.

Saving to buy a home while renting

From the outset, saving money for a home deposit while you’re renting can seem like a difficult prospect. That’s because as well as groceries, entertainment and all the other ongoing expenses of everyday life, a huge chunk of your salary is put towards renting a house or apartment. If you live in a capital city like Sydney, the rent you’re paying on a weekly basis can be astronomical.

For instance, recent data from the Adelaide Bank/REIA Housing Affordability Report found that the proportion of household income needed to meet rent payments in NSW and VIC was 28.2% and 22.6% respectively-- that’s more than a fifth of your income.

However, this doesn’t have to stop you from saving for a deposit in just one year. Once you know the price of the homes you can afford to pay and the deposit amount you will need to save up, you can start building your bank account balance.

The first step is to make a budget and figure out which expenses you can cut back on. For example, you’d be surprised how much you could save by cancelling your gym membership or eating at home instead of dining out a couple of extra nights per week.

Depending on your circumstances, you may even want to consider moving into a cheaper rental property. Even moving just 10 minutes away from the city centre can result in a substantial weekly rent saving, so don’t be afraid to bite the bullet and find somewhere more affordable – remember your ultimate goal.

If you set up a high-interest online savings account and start putting money away each week, your savings balance will quickly start to grow.

Check out our tips for saving for a deposit while renting.

Case Study: Lara’s Year of Saving

How to save for a house case study 1

Lara, 32, is an executive assistant who earns $80,000 a year. Although she’s never been big on saving money – she’s spent all of her annual leave in the past few years travelling the world – and now Lara has around $10,000 saved. In one year’s time, Lara wants to be able to buy herself an apartment for up to $450,000, and she sets herself a goal of saving a 10% deposit ($45,000) in the next 12 months.

To do this, Lara looks at a range of areas in her life where she can save money, including:

ExpenseHow can Lara Save?Total Saving
Private health insuranceLara has a health insurance policy that provides comprehensive hospital and extras cover for $30 a week, or $1,560 a year. But as she is young and fit, this level of cover is far more than Lara needs, so she decides to switch to an entry-level health insurance policy for $15 a week, or $780 a year.$780 per year
DiningOn average, Lara dines out four nights per week, spending an average of $50 each night, which works out to be $200 per week or $10,400 a year. To cut back on expenses, Lara decides that she will only eat out a maximum of two nights per week.$5,200 per year
EntertainmentLara and her group of friends plan a night out every week, which on average sees Lara spend $100 each time. As a film lover, Lara tends to go to the movies once a fortnight, spending around $30 each time. But cutting down each of these expenses (only going to a girls’ night out every second week and going to the movies once a month), Lara can save even more.$3,020
Gym membershipLara has a $75 monthly gym membership ($900 per year) that she’s lucky to use once a month. She’d much rather go for a run or workout in the park instead, so she cancels her membership.$900 per year
TravelEach year for the past decade, Lara has spent a minimum of $7,000 on travel, including trips within Australia and around the globe. With buying a home now her number-one goal, Lara resolves to take a year off travel and put her money into savings instead.$7,000 per year

By cutting back on these expenses, Lara can find almost $17,000 to put towards her home loan deposit. Lara sets up a high-interest online savings account that offers an interest rate of 3% p.a. and she plans to put as much money into the account as possible each week.

Weekly salary: $1,540

Total weekly expenses: $795

  • Weekly rent: $450
  • Dining, entertainment, private health insurance: $175
  • Groceries, fuel and public transport: $170

Amount remaining after expenses: $745 per week

That means that Lara still has $745 of her income left over after all her other expenses, and she decides to put $700 into her high-interest savings account each week. At the end of 12 months, Lara has a total savings balance of $47,245.14 – more than she needs for her deposit.

Saving to buy a home while living with your parents

If you still live at home with your parents, saving money for a deposit should be a whole lot easier. Not only will you not have to contend with the significant expense of rent, but there’s also a good chance that your parents will look after many of your meal expenses as well. This leaves you free to spend a large portion of the money you earn however you wish, so it should be easy to start putting money away in a savings account on a regular basis.

However, even if you are living at home, there are still plenty of ways you can cut back on expenses.  Entertainment and eating out costs usually take up a big portion of the weekly budget, and taking a few simple steps to minimise these costs can be beneficial.

Case Study: Paul Buys a House

How to save for a house case study 2Paul, 24, earns $60,000 a year as a researcher and lives at home with his mum and dad in Sydney’s west. He doesn’t pay any rent, doesn’t pay for any of the household groceries, and doesn’t have to cover any of the home maintenance expenses.

But living at home does have its downsides, and Paul is ready to move out and find his own place. He has a savings balance of around $20,000 at his disposal, and Paul has set his sights on buying an apartment valued at around $500,000 in one year’s time. Confident that he will be able to qualify for a 90% LVR loan, Paul knows he needs to save an extra $30,000 to put together a 10% deposit of $50,000.

He examines his weekly salary of $1,150 to find any areas where he can cut back.

ExpenseHow Can Paul Save?Total Saving
Nights outEvery Friday night, Paul and his mates head into the city for a big night of drinking, which usually ends up costing $200. By drinking less and giving the weekly night out a miss every now and then, Paul thinks he can cut this expense down to an average of $100 per week.$5,200
Video gamesPaul is a keen online gamer and is always looking for the latest releases for his PS4, snapping them up as soon as they go on sale. He currently spends around $1,200 per year on games, so he resolves to limit himself to only buying the games he really wants.$600
SportPaul has played hockey every year for the past five years, but thanks to insurance and turf fees his annual player registration costs $700. He decides to take a year off so he can save money.$700
CarPaul’s ageing Toyota Celica is his other main expense. He loves cruising around with his mates every chance he gets, which, along with his daily commute to work, leads to a weekly petrol bill of $150. By cutting down on his road trips, Paul can save $75 a week.$3,900

Paul opens a high-interest online savings account with an interest rate of 3.25% p.a. If he puts away $600 of his $1,150 wage each week, by the end of 12 months Paul will have saved a total of $52,362.94 – more than enough for a deposit.

Saving to buy a home using investments

If you’re well established financially and you have invested your money wisely, saving for a home in a year is achievable. From term deposits and shares to managed funds and property, there are plenty of investment opportunities available to help you save.

Of course, you need to make sure that you can easily access the money you have invested whenever you need to put down a deposit to buy a home, while you also need to be willing to accept the level of risk attached to whatever investment options you choose.

Case Study: Ian’s Investment Savings

How to save for a house case study 3Ian is 54 years old and looking to retire in the next few years. He and his wife Marjorie are keen to buy a house near the beach on the Sunshine Coast of Queensland, and they think that $750,000 should be enough to buy the a property outright.

As they are both cutting down on their working hours, Ian and Marjorie’s combined weekly income is $2,000. That weekly income goes towards dining, entertainment, travel and everyday living expenses, leaving them $1,000 left over per week.

Ian and Marjorie are living with their daughter for 12 months while they wait to buy their dream home. At the same time, they are paying off a mortgage on an apartment they purchased as an investment property. They also have $100,000 saved that they would like to invest during the next 12 months to help grow their bank balance.

In order to get the money they need to buy a home, Ian and Marjorie plan a three-pronged approach:

1. Term deposit. For a very low-risk investment option, Ian and Marjorie invest $20,000 of their savings in a 12-month term deposit paying interest at a rate of 3.5% p.a. When the deposit matures, they have a balance of $20,711.34.

2. Shares. The remaining $80,000 will be invested in shares, split between two companies Ian has been monitoring:

- $50,000 is invested in a blue-chip stock on the ASX 200, which sees a solid 6.5% increase in its share price over the next 12 months.

- The other $30,000 is invested in an online startup that hits the market with a bang, enjoying a 33% increase in share prices over the year

As a result of Ian’s wise investing, the initial investment of $80,000 is turned into $93,150

3. Property. Ian and Marjorie have $250,000 of equity in their investment property, and they access 80% of that equity ($200,000) to put towards buying their dream home.

With the $200,000 of equity from their investment property combined with their investment balance of $113,861.34, Ian and Marjorie are ready to finance more than 40% of the purchase price of their dream home. And with $1,000 of income (after expenses) each week plus $500 of rental income from the investment property, they can quickly start paying off the rest of the property’s purchase price.

Savings and home deposit tips

  • Figure out how much you need. Before you start saving, take a look at property prices and figure out how much you will need for a deposit. It’s also worth remembering that there are several other costs to cover when you buy a home, including stamp duty and conveyancing.
  • Cut back where you can. Look for areas of your life where you can cut back on the money you spend, whether it be the rent you pay, the amount you spend dining out or simply the funds you spend shoe shopping.
  • Create a budget. Create a rough weekly spending budget and stick to it. This will ensure that you remain on track to achieve your savings goals.
  • Ask for help. If you need help saving a deposit as quickly as possible, will your parents be able to help by gifting you the money for your deposit?
  • Save a larger deposit. The larger your deposit, the less money you will have to borrow, meaning you will have to pay less interest. Providing proof of your savings period over a period of six months or more can also boost your borrowing power.

Belinda Punshon

Belinda is a journalist here at Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

Was this content helpful to you? No  Yes

Related Posts

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the privacy policy, receive follow up emails related to and to create a user account where further replies to your questions will be sent.

Ask a question